- AUD/USD dropped to two-week lows in reaction to the RBA Governor Lowe’s comments.
- The set-up favours bearish traders and supports prospects for a further depreciating move.
- A sustained move beyond the 0.7400 round figure is needed to negate the negative outlook.
The AUD/USD pair struggled to capitalize on the previous day's modest recovery gains, instead met with some fresh supply on Tuesday and dropped to two-week lows during the early European session.
The Reserve Bank of Australia Governor Philip Lowe downplayed speculations for an early rate hike and highlighted the downside risks associated with the recent spread of the Delta variant. This, in turn, was seen as a key factor that weighed on the Australian dollar and exerted downward pressure on the AUD/USD pair.
However, the underlying bullish sentiment in the financial markets extended some support to the perceived riskier aussie. Apart from this, some follow-through US dollar pullback from two-week tops touched in the previous session acted as a tailwind for the AUD/USD pair and helped limit losses, at least for now.
From a technical perspective, the AUD/USD pair, so far, has managed to defend confluence support comprising of 200-period SMA on the 4-hour chart and the 38.2% Fibonacci level of the 0.7106-0.7478 strong rally. This should now act as a key pivotal point as the focus remains on the US consumer inflation figures.
Meanwhile, technical indicators on hourly charts are holding deep in the negative territory but are yet to confirm a bearish bias on the daily chart. This makes it prudent to wait for sustained weakness below the mentioned confluence support before traders start positioning for an extension of the recent depreciating move.
The next relevant support is pegged near the 50% Fibo. level, just below the 0.7300 mark. Some follow-through selling will be seen as a fresh trigger for bearish traders and turn the AUD/USD pair vulnerable to accelerate the slide towards mid-0.7200s en-route the 0.7230-25 support and the 0.7200 round-figure mark.
On the flip side, any attempted recovery now seems to confront immediate resistance near the overnight swing highs, around the 0.7375 region, nearing the 23.6% Fibo. level. This is closely followed by the 0.7400 mark, which if cleared decisively would set the stage for a move towards retesting monthly tops, around the 0.7475-80 region.
AUD/USD 4-hour chart
Technical levels to watch
|Today last price||0.7343|
|Today Daily Change||-0.0026|
|Today Daily Change %||-0.35|
|Today daily open||0.7369|
|Previous Daily High||0.7377|
|Previous Daily Low||0.7336|
|Previous Weekly High||0.7469|
|Previous Weekly Low||0.7345|
|Previous Monthly High||0.7427|
|Previous Monthly Low||0.7106|
|Daily Fibonacci 38.2%||0.7361|
|Daily Fibonacci 61.8%||0.7351|
|Daily Pivot Point S1||0.7344|
|Daily Pivot Point S2||0.7319|
|Daily Pivot Point S3||0.7302|
|Daily Pivot Point R1||0.7385|
|Daily Pivot Point R2||0.7402|
|Daily Pivot Point R3||0.7427|
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.